1. Field of the Invention
The present invention relates to an improved data processing system and, in particular, to a method and system for automated electrical business practice. Still more particularly, the present invention provides a method and system for an electronic commerce transaction for physical goods using an online escrow agent.
2. Description of Related Art
The amount of digital commerce has increased enormously with the growth of the Internet. With the rapid expansion of electronic commerce, the incidence of fraud for online commerce transactions has started to rise for both auction transactions and traditional sales transactions. Fraud can be present during an online transaction whether or not the transaction is between private individuals, commercial entities, or both, and whether or not the transaction occurs through a public click-and-order Web site, an online auction Web site, or some other type of electronic exchange.
An electronic transaction for physical goods between two physically distant parties is inherently difficult as the buyer and the seller must exchange information concerning the goods without an immediate physical inspection of the goods. With the growth of the Internet, the exchange of information has increasingly occurred on the World Wide Web rather than through mail catalogs, brochures, letters, etc. Various electronic services have become available to facilitate sales by allowing a buyer and a seller to visual inspect digital images of the goods. For example, one corporation provides server software that allows a buyer to visually inspect a product by easily and quickly magnifying detailed digital images of a product without requiring massive amounts of digital data to be sent to the buyer. Another corporation provides client-server software that allows a buyer to visually inspect a product by browsing so-called 360-degree images.
An electronic transaction for physical goods between two physically distant parties clearly increases the potential for fraud by removing the immediate physical inspection and transport of goods that occurs during traditional sales transactions. While digital image software enhances the exchange of information, the images are not necessarily representative of the physical goods that are shipped by the seller. A buyer that participates in an online transaction is much more likely to be struck by the old practice of “bait and switch”. In some cases, the seller might not ship the goods that the buyer expected to receive or, possibly, does not ship any goods at all. In less serious cases, the buyer may receive the correct goods but not in the condition that was expected. In any case, the buyer generally has very limited ability to correct the fraud.
In addition to buyer-side risks, the seller also enters into an online transaction with some risk. For example, the buyer might refuse to pay for goods after the seller has shipped the goods. In other cases, the buyer might receive the goods and decide to return the goods. However, the seller might not receive the goods in the condition in which the seller shipped the goods. In some cases, the buyer may actually use a product, subjecting the product to wear-and-tear, prior to shipping the product back to the seller. In these cases, the seller might also have very limited ability to receive just compensation.
In order to protect two physically distant parties that are participating in an electronic transaction for physical goods, electronic escrow services have been developed. Electronic escrow services operate in a manner similar to traditional escrow services in which money or property is placed in the custody of a third party until a specified condition has been fulfilled. For example, an electronic escrow service holds electronic funds, such as credit card transactions, electronic cash payments, etc., until the transaction parties are satisfied with the physical exchange of goods associated with the electronic financial transaction.
However, electronic escrow services do not eliminate all potential types of fraudulent behavior. For example, a buyer can be dissatisfied with received goods and can indicate to the electronic escrow service that the goods are being returned, which occurs occasionally in the normal course of business, whether or not an electronic escrow service is involved in the transaction. After the seller receives the returned goods, however, the seller has the ability to fraudulently state to the electronic escrow service that the returned goods were not received by the seller in their originally shipped condition. Hence, even though an electronic escrow service acts as an independent third party, the possibility for fraudulent behavior still exists. Even if the escrow service requests evidence of damage or wear-and-tear on the returned goods, the proffered evidence does not necessarily represent the returned goods.
Therefore, it would be advantageous to provide a method and system for minimizing disputes between two physically distant parties that are participating in an electronic transaction for physical goods. It would be particularly advantageous to provide a method and system that is economically efficient for both the buyer and the seller in the transaction.